The stock price of Cosmos Health Inc. nearly tripled on Friday as investors responded to the company’s reverse stock split.
The Chicago-based company announced a 1-for-25 stock split late Thursday in an effort to regain compatibility at Nasdaq’s $1 minimum bid price ask, and it went into effect at the opening of trading on Friday morning. The company also changed its name from Cosmos Holdings Inc. at Cosmos Health Inc.
although its pointer remains the same.
The stock initially fell on Friday before surging for a daily gain of 178.9% to $23.01 amid record trading volume, though shares subsequently fell more than 35% in the first half of after-hours trading. Volume in the regular session hit a record of more than 115 million shares on Friday, according to FactSet, which recorded a previous record daily volume of 16.1 million on Nov. 23 and a five-day average volume of 2.1 million.
“We are pleased to proceed with our reverse stock split, which is required for us to regain compliance with Nasdaq’s minimum offering price requirements,” Cosmos Health CEO Greg Siokas said in a statement. “Being listed on Nasdaq has been a key part of our strategy to fund our growth opportunities for the benefit of all our shareholders.”
The company was listed on the Nasdaq in February 2022.
“I am very excited about our business prospects and financial stability, and I strongly believe in the future success of Cosmos and our ability to grow rapidly as an international health and wellness company with multiple strong brands,” Siokas said in the statement.
Cosmos also filed an amended annual report with the Securities and Exchange Commission on Friday, which added the company’s material weakness warning, which reveals that a company does not have adequate internal controls. New additions to the list of inadequate controls, which were added in response to communications with the SEC, were “lack of proper segregation of duties” and lack of “multiple levels of review and oversight.”
Cosmos’ annual filing also contains a going concern warning, which states that management has “substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date of this filing.”
Some traders on Twitter complained that exchanges such as Robinhood Markets Inc.
and Charles Schwab Corp
TD Ameritrade was unable to complete trading in the stock. Neither company responded to emails from MarketWatch seeking to confirm the issues and determine a reason, though TD Ameritrade’s verified Twitter account responded to several users saying it had not yet received the new shares after the split.
“COSM had a reverse split today,” said a TD Ameritrade response. “While the stock is tradable, those awaiting delivery of their COSM shares after the demerger will not be able to sell the new shares until they receive them. Estimated delivery date is unknown at this time.”
Cosmos Health shares are down 78.3% this year, outperforming the S&P 500
decrease of 19%. The stock hit an adjusted 52-week low of $1.69 on Nov. 8, 2022, and a high of $111.25 on Dec. 30, 2021.
MarketWatch staff writer Jeremy C. Owens contributed to this article.